Little support for bill to shut down HealthSource RI

Wednesday

Mar 11, 2015 at 12:01 AM

By Richard Salit Journal Staff Writer

Republican legislation that would shut down HealthSource RI by the end of 2015 — the close of just its second year of operation — received little support but plenty of opposition during a hearing at the State House on Tuesday.

Only a few testified on the bill, including a couple of people who recounted the positive experiences they had purchasing health insurance through the state-based exchange. Several major health entities — including insurers, the state's leading health agency and a doctor's advocacy group — submitted letters opposing the legislation.

Still, Rep. Patricia Morgan, R-Coventry, Warwick and West Warwick, maintained that turning the exchange over to the federal exchange system would save the state much-needed money and continue to provide Rhode Islanders lacking employer insurance an avenue to buy Affordable Care Act coverage.

A state-run exchange is "something nice to have but something that is not essential," Morgan, the bill's lead sponsor, said during the House Finance Committee hearing. Switching to the federal system is "pretty common sense. It's cheaper."

By her own calculations, Morgan estimates it would cost HealthSource about $600 in overhead for each one of its approximately 25,000 subscribers — and that's if it were able to sharply reduce its costs to about $15 million, she said. Switching to the federal system, which costs 3.5 percent per subscriber, would drop that figure to about $120, she said.

What's driving the debate is a phaseout of federal funding for state-based exchanges beginning in 2016. Rhode Island is one of 14 states that opted to create its own exchange.

Anya Rader Wallack, whom Governor Raimondo recently appointed to run HealthSource RI, has been speaking about the need for the exchange to cut its costs and strive to be sustainable.

A lot of the costs during HealthSource's first two years were to get the exchange up and running, said Rep. Debra Ruggiero, D-Jamestown, Middletown, cautioning against acting rashly.

"I think we need to drill down," said Ruggiero, adding that local control is preferable.

"Control is overrated," Morgan countered.

Democratic Rep. Raymond Gallison, the committee chair, offered assurances that no action would be taken "before we find out all of the costs" and without hearing directly from HealthSource RI officials, none of whom testified on Tuesday. The first step, he said, will be to see how much the governor includes for HealthSource in her 2016 budget proposal, to be unveiled Thursday.

Linda Katz, policy director for the Economic Progress Institute, said deciding to switch to the federal exchange system before a key Supreme Court decision on Obamacare is "a big risk to take." The case will decide whether premium subsidies may be legally offered to consumers through the federal exchanges.

Katz noted that HealthSource's SHOP system, developed specifically for employers, is only available in Rhode Island. In addition, health insurers in Rhode Island have gone to great length and expense to link their systems with HealthSource RI and switching to the federal system could be costly and lead to a disruption in service, she said.

Among those that sent letters opposing the bill were Blue Cross & Blue Shield of Rhode Island, Neighborhood Health Plan of Rhode Island, the Rhode Island Medical Society, Rhode Island Kids Count and the state Executive Office of Health and Human Services.